32.202-3
Conducting market research about financing terms
Contracting officers should use market research to align government contract financing terms with prevailing commercial practices in the relevant market.
Overview
FAR 32.202-3 emphasizes the importance of including contract financing considerations as part of market research activities conducted under FAR Part 10. When market research is performed for contract financing, contracting officers are encouraged to evaluate industry norms and practices regarding financing terms. This includes assessing how common contract financing is in the market, typical levels and types of financing, the structure and frequency of payments, and any unique payment or liquidation methods. The goal is to ensure that government contract financing terms are competitive and aligned with commercial practices, thereby supporting effective acquisition planning and negotiation.
Key Rules
- Market Research for Contract Financing
- Contracting officers should include contract financing as a topic in market research when appropriate.
- Evaluation Criteria
- Officers should consider industry standards for financing, including prevalence, levels, payment structures, and liquidation methods.
Responsibilities
- Contracting Officers: Must assess and document commercial financing practices during market research to inform contract terms.
- Contractors: Should be prepared to provide information on standard industry financing practices if requested.
- Agencies: Should ensure market research is thorough and supports sound acquisition decisions.
Practical Implications
- This section ensures that government financing terms are competitive and reflect commercial realities, reducing risk of unfavorable terms or noncompetitive offers.
- Failure to consider market norms may result in less attractive contracts or compliance issues.
- Contractors benefit when government terms align with industry standards, improving cash flow and contract performance.